Katie Schenk - August 31, 2017
We’re not going to lie; it’s tough to figure out the return on investment (ROI) on international Master’s in engineering programmes.
As with any other degree, it’s almost impossible to predict personal post-graduate salary. And, of course, personal expenditure varies from student to student, regardless of the estimated cost of attendance provided by each university.
Those calculations are just the beginning of the challenges to be found in the ROI on international Master’s in engineering programmes. The reporting on median or average post-grad salaries even by field of study for each school isn’t standardised. Some schools break compensation reporting down by department; others by level of degree – and a very few manage both.
On top of that, there’s the often overlooked fact that the stated cost of tuition isn’t what most students pay. Besides scholarships and financial aid packages, many international students take loans – and the amount of interest paid factors into the ROI equation.
What does ROI really mean?
Some students consider job satisfaction into their equation – especially if they’ve had a few years of work experience in a field or position that isn’t what they thought it would be.
Students in countries where competition for jobs is fierce, such as India, factor the ability to secure a job at all in their ROI calculations.
Most agree that the easiest way to manipulate any ROI equation is to look at the financial aspects exclusively. But, even then, there are questions. Should you consider the ROI over a 30-year period or how long it will take for you to break even?
In the article, Is Grad School Worth It? 7 Steps To Calculating The ROI, even a reputable Forbes contributor seems to struggle with the actual ROI calculation, while providing some solid guidelines of when it is and isn’t a good idea to take the Master’s step.
The truth is that return on investment is as personal as it gets. Lists touting the universities with the best ROI – even when they’re engineering specific – cannot factor in the actual spend or return for every student. The more specific they are to you, the more accurate they’ll be. But, you’re unlikely to find such a list.
By all means, if you happen to spot a list called, best ROI for international Master’s students pursuing mechanical engineering while coming from developing countries with three to five years work experience, please let us know. We think that would be a marvellous resource to have.
Instead, you’ll need to consider some general statistics and do the tedious work of calculating your personal ROI to make a table that applies to you. To do that, you’ll need to get an idea of what you’ll earn and how much you’ll spend.
How much does salary rise after a Master’s in engineering?
There are, luckily a few resources that provide an indication of salary in broad terms. We’ve previously covered a few of them, including stats from the (American) National Society of Professional Engineers.
A Georgetown University study, The Economic Value of College Majors, conducted in 2015 provides a stunning overview of Bachelor’s and graduate salaries according to field. It’s generalised, insomuch as it doesn’t take into account the expected salary per university, nor does it consider international students. These figures reflect American statistics only.
The good news for international students planning to study and accept a position in the United States is that their salary could increase from much lower levels than reported here.
But, the reality is that even if these figures included the salaries of international students before accepting a position in the US, these are a summary of salaries provided across a career’s spectrum. It’s not unreasonable to believe that the majority of those earning over the median are those in the later stages of their career.
It’s much more practical to consider the average or median starting salaries of recent graduates. But, this is where the trouble with non-uniform reporting really hits home.
For example, MIT reports median salaries. Master’s in engineering grads from MIT is $115,000. The median salary for those graduating with a Bachelor’s in science from the same university is $80,000. There is a substantial difference between Bachelor’s and Master’s salaries – but those Bachelor’s still have a degree from perhaps the number one engineering school in the world.
More intensive breakdowns are available from certain engineering universities, such as Georgia Tech which provides an easy breakdown of starting salaries. It’s worth noting that the university offers more degrees than this, but these are the fields with enough data between Bachelor’s and Master’s side-by-side.
A similar comparison can be found in the reports from Carnegie Mellon’s College of Engineering.
Even if you don’t plan to study at Carnegie Mellon or Georgia Tech, there is something to be gleaned from all of these tables. And, that’s the percentage of increase between the median salary of a Bachelor’s degree and that at the graduate level.
Take a look at the numbers provided in the Georgetown study.
If you were to earn the median salary provided for architectural engineers already, the increase to median salary with a Master’s is tiny, with an increase of 1.25 percent. But, if you can move from the 25th percentile with a Bachelor’s into the 75th percentile with a Master’s, that’s an increase of over 114 percent.
And, that’s not even the highest rate of increase. The jump from low to high between the degrees for biomedical engineering is 200 percent.
Looking again at the data this time considering the percentage of difference in salaries, it’s possible to make some broad generalisations about salary increases. And, that’s the first step towards looking at ROI.
The Economic Value of College Majors, Georgetown Study
What’s the cost of your investment?
This is theoretically a little easier.
Schools lay out their tuition in one way or another. But, not every university lays it out the same way; some provide a flat fee, while others give a credit hour rate (along with min and max numbers of credit hours per quarter or semester).
In addition, American universities are required to provide an estimate of additional expenses. These include anything from housing (both on and off campus) to books and health insurance. (And, you will be required to have health insurance to get a visa to study internationally.)
But, you’ll notice that the total cost of attendance isn’t always accurate. There are reports of wide differences between the costs provided by the university and the reality on the ground for students. While you’ll typically find less of a difference between the reported and actual costs in smaller universities in smaller, college towns than you would in Boston or New York City, they’re still there.
Even if the costs provided were spot on, it’s unlikely that they cover everything. Looking at the current proposed costs of attendance across four schools will make it clear that line items are left out no matter where you look. MIT, Stanford, Berkley, and Caltech all consider different things.
If you’re wondering where the mandatory health insurance is for Caltech, they’ve put it under personal expenses. And, you should note that there are differences between the types of housing this covers. There isn’t one single type of accommodation that translates between schools easily.
Besides the differences in costs for insurance and books (which is a little staggering), it’s tough to know what personal expenses include – and to get an idea of what things will cost for international students travelling with their spouses or families.
Still, uncovering the costs involved is a process. It involves ringing up international student offices, trawling student and alumni blogs, and a realistic look at what you need for a couple of years abroad. (That almost certainly means internet.) There are costs to look out for, of course, but as you can see, they’ll vary from one part of the world or country to another.
And, there’s another cost you can’t avoid if you require loans to help fund your engineering Master’s. If you accept a loan, just about any loan, you will be paying interest. You may not need to make those payments while on campus, but they’re part of the cost of study. The big exception is, of course, countries that don’t mandate interest on family loans. But, be careful, many of them do.
It’s possible to see representative samples provided to Prodigy Finance borrowers for every supported school on the loan information pages. (But, it’s not possible to provide you with a personal APR or amount you’ll qualify for until you’ve been admitted to a supported engineering Master’s programme and apply for a Prodigy Finance loan.) You’ll need to make some guesses, but it’s possible to get a broad idea.
Just to make it a little more complicated (because this ROI calculation isn’t difficult enough yet), you also need to consider the loss of income while you study. If you’re not deciding between a promotion or grad school, though, this might be the easiest line item on your ROI spreadsheet.
Determining your ROI
It’s one thing to know that your salary could increase by 20 or 30 percent over time? But, what does that really mean when you need to outlay between $120,000 and $180,000 before interest on your loan or two years without your standard income?
At what point does the investment make sense for international students?
We can’t tell you the answer to that.
It’s relatively easy to show the costs of attendance and provide you with an estimated salary increase. We can also point you towards a calculator that demonstrates anticipated income between graduation and retirement based on standard annual increases.
Even better, there’s a calculator that will enable to you compare the earnings you could expect from your current salary with the salary you could potentially earn with a Master’s degree including the cost of your loan and loss of work. And, that’s certainly a stunning tool, which you should use to compare engineering programmes against each other.
But, we can’t tell you whether the ROI of your international Master’s in engineering is worth it for you or when it would be the very best move for your career.
Some students have dream careers that almost require a Master’s, even if it’s not going to provide them with a salary increase of 32 percent. Others may want the opportunity to work in another country, which is generally easier when recruiting on an international campus. And, for some, it’s all about the bottom line.
If it is, indeed, all about the amount of money you’ll make then take a close look at the schools that interest you alongside the general increases and expenses above. You may just like what you see.
Prodigy Finance - December 13, 2018
For many, the H-1B visa is the stepping stone between the OPT extension on the F-1 visa and Green... Continue reading
Prodigy Finance - December 05, 2018
At least 80% of Prodigy Finance borrowers hail from emerging market economies and 59% of... Continue reading
Katie Schenk - December 03, 2018
Hoping to further your engineering career? A masters degree is one of the fastest ways to... Continue reading
Prodigy Finance - November 28, 2018
Interested in a Prodigy Finance loan? Here's your chance to learn more about how long the... Continue reading
Investing - Risk Policy
Investment is restricted to high net worth and sophisticated investors who can demonstrate that they have sufficient knowledge and experience to understand the risks of investing. Risks include the potential loss of capital and limited liquidity. Capital at risk. Investments are long term and it may not be possible to sell your investment prior to maturity. See our full Risk Warning and Terms and Conditions.
© Prodigy Finance Limited 2007 - 2018. All Rights Reserved. Prodigy Finance Limited is incorporated in the United Kingdom (Company Number 05912562) with its registered address at Palladium House 1-4 Argyll Street, London, W1F 7LD and registered with the Office of the Information Commissioner (Reg. No. Z9851854). Prodigy Finance is authorised and regulated by the Financial Conduct Authority (firm registration number 709641) for certain consumer credit activities and for investment activities for investors who have agreed to its terms. Prodigy Finance loans are offered to eligible borrowers who are studying outside of their country of residence and the loans are governed by English law.
Prodigy Services Limited is incorporated in the United Kingdom (Company Number 10201413) with its registered address at Palladium House 1-4 Argyll Street, London, W1F 7LD. Prodigy Services is an appointed representative of Sapia Partners LLP which is authorised and regulated by the Financial Conduct Authority. Prodigy Services Limited promotes offers of securities for third party issuers to eligible investors.